Let’s start by just laying out what I found to be the key takeaways as they pertain to Windows Live and the more general Software + Services realm, and match up some of what Bill said in his answers to our questions (and let me take the time here to really thank my fellow bloggers in attendance for asking an insightful, varied, intelligent, and fun set of questions).:

1. Microsoft continues to be poised to sell to big business

We’ve come obviously a long way as an industry. We’ve got a good sized software industry, and we’re revolutionizing most everything with digital approaches broadly.

Most recently, the idea of how you match buyers and sellers, and how you do deep collaboration, obviously that’s become a defining application for the Web.

In the next few years, things should improve pretty substantially. I mean, we still don’t think of TV as being a Web application, but the right pieces have been put into place to change that. The phone companies, AT&T and Verizon, actually do use Web-based delivery of video, non-broadcast, and, in fact, they’re building infrastructures that allow you to do personalized video, so you can interact with the context, interact with the ads, things that we’ve targeted, high-definition, and they use a software platform called Media Room that we created to do that. That’s one of the things we got into way before its time, have been working on it for a long time, and we’re just at about a million people using that right now. Over time, we expect the cable cos will want to go with a broad software platform as well.

2. The consumer market may drive Microsoft’s image, but not necessarily its core business, or its business decisionmaking

All those consumer services are basically big, big volume. They’re tiny businesses in a sense, but they’re very important for the population of users that you connect up to and the opportunities you get out of that.
…
Some of the things like state in the sky, obviously we want to do a lot more innovation so that everybody just understands that they should use that. Today, no matter whose thing it is, .Mac or the various eDrive cloud store type things, they actually are all pretty small share, they’re kind of messy to use. We think that by the way that we’ll connect up to Windows in a rich way we’ll be able to do something pretty dramatic there, but that awaits the next big wave that comes along.
…
So, we always have a few categories like that, but most of our revenue — who’s revolutionizing management software? Who’s revolutionizing security software? I mean, seriously, who do you think? The business computing market, which is way bigger than the consumer computing market, no one pays attention to it. Even in the Wall Street Journal, and you think, oh, this is the paper they’re going to tell me about business computing; no, it’s all about consumer computing. It’s okay, but thank God for business computing, because it allows us to price our consumer computing stuff super cheap, and still pay the salaries of these wonderful researchers who like to be paid.
…
Anyway, I’m — (laughter.) It’s not the first time I’ve heard that (MS not innovating). I’m not — (laughter) — it’s a very common view that if you figure out how I can get rid of it, I will do so.

3. Microsoft plans to continue to focus on big business

Also in the Internet today, if you want to build an application that’s going to be very high scale and very reliable, you’re basically having to reinvent everything to do that. The vision is that people should be able to just subscribe to a service that takes care of that for them.

Now, no one is offering that today. Amazon offers raw computing with EC2, they offer raw storage with S3, but they don’t offer a scalable model where you just basically write the app and then it scales infinitely. You have to do all the technical work still, because it’s basically a UNIX machine is the paradigm.

The idea of cloud services that take care of fault tolerance, load balancing, and then let any kind of startup just have it be auto-hosted, and then, fine, if they’re popular they pay a little bit for the capacity that is used, but they don’t have to do some brilliant engineering design.

Pundits and bloggers, present company included, like to cry and whine about how this Web 2.0 company or that is going to take over and be the next Microsoft. With a firmly entrenched Office, and desktop, and server market, and rapid expansion into developer tools for Rich Interactive Applications, video, datacenters, and cloud services, the reality is that Microsoft is positioning itself to be a player for a long time to come.

Does that mean that Microsoft should disallow or ignore what the pundits say? Well no probably not. The truth is that search share isn’t growing, Apple is poised to take over a disturbingly large share of consumer desktop purchases, and even Bill Gates knows the perception that Microsoft doesn’t innovate is “a very common view”. Perhaps because Microsoft focuses largely on big business, it hasn’t focused enough on its perception in the consumer market. Now, with Gates stepping down and Ray Ozzie nowhere to be found, changing the perception doesn’t seem likely. Steven Sinofsky is busy putting together his Ministry of Truth, concentrating on squelching leaks instead of building loyalty and compassion for his products, and the next generation of corporate business people are more likely to have used Google and Apple than the last (which grew up using nothing at all). Bill addressed this as well, saying:

So, I think every business and organization benefits by communicating to its customers, to its partners, the more you do the better you are. Our success is not based on any type of secrecy about what we’re doing. Apple likes secrecy, but good luck to them. It’s not a period of time where it’s that easy to keep secrets. There are various regimes around the world that are finding that, and various companies that want to surprise people with the big event. We want to make sure that we’re not creating expectations we can’t fulfill. So, we like to know when we’re going to try and get something done before we promise it. But just talking about our general direction, we’ve always wanted to be totally open.
…
I’ll have to ask Dean what the hell is going on. I mean, we’re not — there’s not like some deep secret about what we’re doing with IE.

So will Microsoft continue to dominate, moving into new markets by building out datacenters and cloud storage, developing new tools like Silverlight, and continuing to win in the server and information worker markets? Or will ignoring the pundits who claim that Microsoft must be more open, more conscious of a poor perception in the marketplace signal the beginning of the end of the software giant post Bill Gates? Truthfully, it’s why we do what we do here at LiveSide. Either way, it’s going to be a heck of a lot of fun to watch. We want to thank the fine people at Mix for giving us the opportunity to speak with Bill Gates, and to continue the conversation.